Archive for the ‘CommUnity of Minds Archive’ Category

Wise woman Ellen Brown has been suggesting for many years that we need a political-economic system that serves each citizen and every citizen. This is her newest essay. Today’s article is reposted from Counter Punch.

The Populist Revolution: Bernie and Beyond

Ellen Brown

The world is undergoing a populist revival. From the revolt against austerity led by the Syriza Party in Greece and the Podemos Party in Spain, to Jeremy Corbyn’s surprise victory as Labour leader in the UK, to Donald Trump’s ascendancy in the Republican polls, to Bernie Sanders’ surprisingly strong challenge to Hillary Clinton – contenders with their fingers on the popular pulse are surging ahead of their establishment rivals.

Today’s populist revolt mimics an earlier one that reached its peak in the US in the 1890s. Then it was all about challenging Wall Street, reclaiming the government’s power to create money, curing rampant deflation with US Notes (Greenbacks) or silver coins (then considered the money of the people), nationalizing the banks, and establishing a central bank that actually responded to the will of the people.

Over a century later, Occupy Wall Street revived the populist challenge, armed this time with the Internet and mass media to spread the word. The Occupy movement shined a spotlight on the corrupt culture of greed unleashed by deregulating Wall Street, widening the yawning gap between the 1% and the 99% and destroying jobs, households and the economy.

Donald Trump’s populist campaign has not focused much on Wall Street; but Bernie Sanders’ has, in spades. Sanders has picked as will so will I figure up the baton where Occupy left off, and the disenfranchised Millennials who composed that movement have flocked behind him.

The Failure of Regulation

Sanders’ focus on Wall Street has forced his opponent Hillary Clinton to respond to the challenge. Clinton maintains that Sanders’ proposals sound good but “will never make it in real life.” Her solution is largely to preserve the status quo while imposing more bank regulation.

That approach, however, was already tried with the Dodd-Frank Act, which has not solved the problem although it is currently the longest and most complicated bill ever passed by the US legislature. Dodd-Frank purported to eliminate bailouts, but it did this by replacing them with “bail-ins” – confiscating the funds of bank creditors, including depositors, to keep too-big-to-fail banks afloat. The costs were merely shifted from the people-as-taxpayers to the people-as-creditors.

Worse, the massive tangle of new regulations has hamstrung the smaller community banks that make the majority of loans to small and medium sized businesses, which in turn create most of the jobs. More regulation would simply force more community banks to sell out to their larger competitors, making the too-bigs even bigger.

In any case, regulatory tweaking has proved to be an inadequate response. Banks backed by an army of lobbyists simply get the laws changed, so that what was formerly criminal behavior becomes legal. (See, e.g., CitiGroup’s redrafting of the “push out” rule in December 2015 that completely vitiated the legislative intent.)

What Sanders is proposing, by contrast, is a real financial revolution, a fundamental change in the system itself. His proposals includeeliminating Too Big to Fail by breaking up the biggest banks; protecting consumer deposits by reinstating the Glass-Steagall Act (separating investment from depository banking); reviving postal banks as safe depository alternatives; and reforming the Federal Reserve, enlisting it in the service of the people.

Time to Revive the Original Populist Agenda?

Sanders’ proposals are a good start. But critics counter that breaking up the biggest banks would be costly, disruptive and destabilizing; and it would not eliminate Wall Street corruption and mismanagement.

Banks today have usurped the power to create the national money supply. As the Bank of England recently acknowledged, banks create money whenever they make loans. Banks determine who gets the money and on what terms. Reducing the biggest banks to less than $50 billion in assets (the Dodd-Frank limit for “too big to fail”) would not make them more trustworthy stewards of that power and privilege.

How can banking be made to serve the needs of the people and the economy, while preserving the more functional aspects of today’s highly sophisticated global banking system? Perhaps it is time to reconsider the proposals of the early populists. The direct approach to “occupying” the banks is to simply step into their shoes and make them public utilities. Insolvent megabanks can be nationalized – as they were before 2008. (More on that shortly.)

Making banks public utilities can happen on a local level as well. States and cities can establish publicly-owned depository banks on the highly profitable and efficient model of the Bank of North Dakota. Public banks can partner with community banks to direct credit where it is needed locally; and they can reduce the costs of government by recycling bank profits for public use, eliminating outsized Wall Street fees and obviating the need for derivatives to mitigate risk.

At the federal level, not only can postal banks serve as safe depositories and affordable credit alternatives, but the central bank can provide is it just a source of interest-free credit for the nation – as was done, for example, with Canada’s central bank from 1939 to 1974. The U.S. Treasury could also reclaim the power to issue, not just pocket change, but a major portion of the money supply – as was done by the American colonists in the 18th century and by President Abraham Lincoln in the 19th century.

Nationalization: Not As Radical As It Sounds

Radical as it sounds today, nationalizing failed megabanks was actually standard operating procedure before 2008. Nationalization was one of three options open to the FDIC when a bank failed. The other two were (1) closure and liquidation, and (2) merger with a healthy bank. Most failures were resolved using the merger option, but for very large banks, nationalization was sometimes considered the best choice for taxpayers. The leading U.S. example was Continental Illinois, the seventh-largest bank in the country when it failed in 1984. The FDIC wiped out existing shareholders, infused capital, took over bad assets, replaced senior management, and owned the bank for about a decade, running it as a commercial enterprise.

What was a truly radical departure from accepted practice was the unprecedented wave of government bailouts after the 2008 banking crisis. The taxpayers bore the losses, while culpable bank management not only escaped civil and criminal penalties but made off with record bonuses.

In a July 2012 article in The New York Times titled “Wall Street Is Too Big to Regulate,” Gar Alperovitz noted that the five biggest banks—JPMorgan Chase, Bank of America, Citigroup, Wells Fargo and Goldman Sachs—then had combined assets amounting to more than half the nation’s economy. He wrote:

With high-paid lobbyists contesting every proposed regulation, it is increasingly clear that big banks can never be effectively controlled as private businesses. If an enterprise (or five of them) is so large and so concentrated that competition and regulation are impossible, the most market-friendly step is to nationalize its functions. . . .

Nationalization isn’t as difficult as it sounds. We tend to forget that we did, in fact, nationalize General Motors in 2009; the government still owns a controlling share of its stock. We also essentially nationalized the American International Group, one of the largest insurance companies in the world, and the government still owns roughly 60 percent of its stock.

A more market-friendly term than nationalization is “receivership” – taking over insolvent banks and cleaning them up. But as Dr. Michael Hudson observed in a 2009 article, real nationalization does not mean simply imposing losses on the government and then selling the asset back to the private sector. He wrote:

Real nationalization occurs when governments act in the public interest to take over private property. . . . Nationalizing the banks along these lines would mean that the government would supply the nation’s credit needs. The Treasury would become the source of new money, replacing commercial bank credit. Presumably this credit would be lent out for economically and socially productive purposes, not merely to inflate asset prices while loading down households and business with debt as has occurred under today’s commercial bank lending policies.

A Network of Locally-Controlled Public Banks

“Nationalizing” the banks implies top-down federal control, but this need not be the result. We could have a system of publicly-owned banks that were locally controlled, operating independently to serve the needs of their own communities.

As noted earlier, banks create the money they lend simply by writing it into accounts. Money comes into existence as a debit in the borrower’s account, and it is extinguished when the debt is repaid. This happens at a grassroots level through local banks, creating and destroying money organically according to the demands of the community. Making these banks public institutions would differ from the current system only in that the banks would have a mandate to serve the public interest, and the profits would be returned to the local government for public use.

Although most of the money supply would continue to be created and destroyed locally as loans, there would still be a need for the government-issued currency envisioned by the early populists, to fill gaps in demand as needed to keep supply and demand in balance. This could be achieved with a national dividend issued by the federal Treasury to all citizens, or by “quantitative easing for the people” as envisioned by Jeremy Corbyn, or by quantitative easing targeted at infrastructure.

For decades, private sector banking has been left to its own devices. The private-only banking model has been thoroughly tested, and it has proven to be a disastrous failure. We need a banking system that truly serves the needs of the people, and that objective can best be achieved with banks that are owned and operated by and for the people.

America: Home of the wimps?

David Cay Johnston

Listening to Republican presidential candidates on Tuesday night, you would think that America has become a nation of wimps, cowering in fear for no good reason over a murderous band of Middle Easterners with little power to harm us.

Polls show strong support for Donald Trump, who wants to spy on mosques and ban all Muslims from entering the country. Ben Carson fears a Muslim president would follow Sharia, unaware of the most basic principles of our Constitution. Sen. Ted Cruz spreads sophisticated versions of the same un-American rhetoric and calls President Barack Obama “an apologist” for terrorists during appearances on conspiracy theorist Glenn Beck’s show.

All three, along with the other Republican candidates, say if elected they will protect us from “radical Islamic terrorists.” But the reality is that their vile comments threaten America far more than those they attack.

The Islamic State in Iraq and the Levant (ISIL) is a pipsqueak. It has no capacity to occupy a single inch of American soil and never will. It is no military threat to America or Europe. All it can do is recruit foolish people to harry us with violent crimes that have no military significance.

Yet under the influence of such political hyperventilating, Americans express their fears to journalists and pollsters about this mouse that cannot even roar. Their anxiety is as ludicrous as the plot of the 1959 Peter Sellers farce about the fictional Duchy of Grand Fenwick invading Manhattan so that, by surrendering, it could get American aid for its wine industry.

ISIL’S chief recruiter

Trump’s remarks inciting hatred of Muslims (and Mexicans) have made him ISIL’s chief recruitment officer. ISIL has no better friend than Trump, though his ignorance and narcissism blind him to this awful reality.

ISIL markets the idea that Islam is under attack, persuading people long on zeal and short on good sense to embrace its apocalyptic fantasies that the end is near. ISIL is an enemy not just of America and the West, but also of any Muslims who do not hew to its vision of religious piety, itself a murderous apostasy that offends the Prophet Muhammad and his teachings.

Carson, Cruz and others help ISIL by encouraging the idea that America and its allies are at war with Islam, something that George W. Bush and Obama frequently emphasized is not the case.

Now the leading Democratic candidate, Hillary Clinton, has joined in. At a town hall last week in Waterloo, Iowa, after the massacre in San Bernardino, California, she pandered, saying, “It’s OK, it’s OK to be afraid.”

No, it is not OK to be afraid. And shame on her for saying that, lending credence to the modern Know-Nothings in the Republican Party.

Being afraid is what ISIL, the remnants of Al-Qaeda and their murderous friends want. What they cannot withstand are smart responses that degrade their capacity and demonstrate American distaste for government violence beyond the minimum necessary in response.

What we should fear are pandering politicians. We should be anxious when politicians promise safety at the price of trashing our Constitution, our values and our history.

Anyone who has read the writings of Osama bin Laden and his ideological spawn knows that their objective is to get America to destroy itself by getting into endless land wars in the Middle East.

One in 110 million

So let’s get some perspective and separate the deadly and evil stunts of ISIL supporters from the actual risks we face: Our chances of being killed in a terrorist attack are one in four million if you go all the way back to 1995, which would include the Oklahoma City bombing by a right-wing American fanatic.

If you count just the years after 9/11 the odds drop to one in 110 million, Professors John Mueller and Mark Stewart show in their brand new book “Chasing Ghosts: The Policing of Terrorism.”

Since 9/11 attacks by the far right have killed 48 Americans, compared to 45 in attacks by people claiming to be jihadists, reports compiled by the New America Foundation show.

And what of Christian, Jewish and Hindu fanatics? How about the many murders at Planned Parenthood clinics by people who claim to be Christians seeking to impose their ideology on everyone else? Or what of the Jewish Defense League, whose leaders Irv Rubin and Earl Krugel plotted in November 2001 to kill Representative Daryl Issa, a California Republican of Arab descent. Years earlier the Rand Corporation think tank warned that “for more than a decade, the Jewish Defense League (JDL) has been one of the most active terrorist groups in the United States.”

More broadly, homicides claimed 16,121 American lives in 2013, with 70 percent of the victims shot to death, the federal Centers for Disease Control reported. So far this year 12,662 Americans have been shot to death.

In this century tornadoes have killed 49 Americans per year in this century if you ignore the 553 deaths in 2011, which raises the average to 84.

Lightning killed 26 Americans this year, which is more than the 14 victims of the San Bernardino mass murder and the five killed in Chattanooga last July.

Yes, tornadoes and lightning have proven far more deadly than impotent ISIL, but you wouldn’t know that from the exaggerated fear-mongering from our presidential candidates.

Leadership

Contrast that with what our leaders said in the past in far more worrying circumstances.

On the night of 9/11, in a national television address, President George W. Bush said, “Terrorist attacks can shake the foundations of our biggest buildings, but they cannot touch the foundation of America.”

More than a half century ago, when a nuclear-armed Soviet Union was an actual military threat, a new president spoke with determination about preserving liberty. In his 1961 inaugural address, John F Kennedy said “Let every nation know, whether it wishes us well or ill, that we shall pay any price, bear any burden, meet any hardship, support any friend, oppose any foe to assure the survival and the success of liberty.”

That was not a call to arms, but to smarts. And key to those smarts was showing that freedom comes not from the barrel of a gun, but from a determination of each of us to protect the liberties of everyone else, especially those whose views we dislike.

In 1933, when the worst economic collapse in our history ravaged the nation, Franklin D. Roosevelt took office saying that “the only thing we have to fear is fear itself — nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advances.”

Where are the leaders today who will appeal to our best instincts? Who among the presidential wannabes operates from the position of strength that our national anthem declares in all four stanzas, written when a foreign Army had occupied the nation’s capital and was advancing on Baltimore?

We need leaders who will encourage us to stand firm, act smartly and promise that we will remain “the land of the free and the home of the brave.”

As readers of this site know, capitalism is an obsolete economic strategy that must fail as humanity reaches the limits of clean water, clean air, and affordable clean fuel on a finite planet. … Today’s article is penned by wise woman Ellen Brown and reposted from Counter Punch. It reveals some of the latest desperate strategies of our capitalist bankers.

Hang Onto Your Wallets: Negative Interest, the War on Cash and the $10 Trillion Bail-in

Ellen Brown

Remember those old ads showing a senior couple lounging on a warm beach, captioned “Let your money work for you”? Or the scene in Mary Poppins where young Michael is being advised to put his tuppence in the bank, so that it can compound into “all manner of private enterprise,” including “bonds, chattels, dividends, shares, shipyards, amalgamations . . . ”?

That may still work if you’re a Wall Street banker, but if you’re an ordinary saver with your money in the bank, you may soon be paying the bank to hold your funds rather than the reverse.

The stated justification for this move is to stimulate “demand” by forcing consumers to withdraw their money and go shopping with it. When an economy is struggling, it is standard practice for a central bank to cut interest rates, making saving less attractive. This is supposed to boost spending and kick-start an economic recovery.

That is the theory, but central banks have already pushed the prime rate to zero, and still their economies are languishing. To the uninitiated observer, that means the theory is wrong and needs to be scrapped. But not to our intrepid central bankers, who are now experimenting with pushing rates below zero.

Locking the Door to Bank Runs: the Cashless Society

The problem with imposing negative interest on savers, as explained in the UK Telegraph, is that “there’s a limit, what economists called the ‘zero lower bound’. Cut rates too deeply, and savers would end up facing negative returns. In that case, this could encourage people to take their savings out of the bank and hoard them in cash. This could slow, rather than boost, the economy.”

Again, to the ordinary observer, this would seem to signal that negative interest rates won’t work and the approach needs to be abandoned. But not to our undaunted central bankers, who have chosen instead to plug this hole in their leaky theory by moving to eliminate cash as an option. If your only choice is to keep your money in a digital account in a bank and spend it with a bank card or credit card or checks, negative interest can be imposed with impunity. This is already happening in Sweden, and other countries are close behind. As reported on Wolfstreet.com:

The War on Cash is advancing on all fronts. One region that has hogged the headlines with its war against physical currency is Scandinavia. Sweden became the first country to enlist its own citizens as largely willing guinea pigs in a dystopian economic experiment: negative interest rates in a cashless society. As Credit Suisse reports, no matter where you go or what you want to purchase, you will find a small ubiquitous sign saying “Vi hanterar ej kontanter” (“We don’t accept cash”) . . . .

The pioneering theoretician of negative-interest money was the German-Argentinean businessman Silvio Gesell, who called it “free-money” (Freigeld) . . . . The system he proposed in his 1906 masterwork, The Natural Economic Order, was to use paper currency to which a stamp costing a small fraction of the note’s value had to be affixed periodically. This effectively attached a maintenance cost to monetary wealth.

. . . [In 1932], the depressed town of Wörgl, Austria, issued its own stamp scrip inspired by Gesell . . . . The Wörgl currency was by all accounts a huge success. Roads were paved, bridges built, and back taxes were paid. The unemployment rate plummeted and the economy thrived, attracting the attention of nearby towns. Mayors and officials from all over the world began to visit Wörgl until, as in Germany, the central government abolished the Wörgl currency and the town slipped back into depression.

. . . [T]he Wörgl currency bore a demurrage rate [a maintenance charge for carrying money] of 1 percent per month. Contemporary accounts attributed to this the very rapid velocity of the currencies’ circulation. Instead of generating interest and growing, accumulation of wealth became a burden, much like possessions are a burden to the nomadic hunter-gatherer. As theorized by Gesell, money afflicted with loss-inducing properties ceased to be preferred over any other commodity as a store of value.

There is a critical difference, however, between the Wörgl currency and the modern-day central bankers’ negative interest scheme. The Wörgl government first issued its new “free money,” getting it into the local economy and increasing purchasing power, before taxing a portion of it back. And the proceeds of the stamp tax went to the city, to be used for the benefit of the taxpayers. As Eisenstein observes:

It is impossible to prove . . . that the rejuvenating effects of these currencies came from demurrage and not from the increase in the money supply . . . .

Today’s central bankers are proposing to tax existing money, diminishing spending power without first building it up. And the interest will go to private bankers, not to the local government.

Consumers today already have very little discretionary money. Imposing negative interest without first adding new money into the economy means they will have even less money to spend. This would be more likely to prompt them to save their scarce funds than to go on a shopping spree.

People are not keeping their money in the bank today for the interest (which is already nearly non-existent). It is for the convenience of writing checks, issuing bank cards, and storing their money in a “safe” place. They would no doubt be willing to pay a modest negative interest for that convenience; but if the fee got too high, they might pull their money out and save it elsewhere. The fee itself, however, would not drive them to buy things they did not otherwise need.

Is There a Bigger Threat than a Sluggish Economy?

The scheme to impose negative interest and eliminate cash seems so unlikely to stimulate the economy that one wonders if that is the real motive. Stopping tax evaders and terrorists (real or presumed) are other proposed justifications for going cashless. Economist Martin Armstrong goes further and suggests that the goal is to gain totalitarian control over our money. In a cashless society, our savings can be taxed away by the banks; the threat of bank runs by worried savers can be eliminated; and the too-big-to-fail banks can be assured that ample deposits will be there when they need to confiscate them through bail-ins to stay afloat.

And that may be the real threat on the horizon: a major derivatives default that hits the largest banks, those that do the vast majority of derivatives trading. On November 10, 2015, the Wall Street Journal reported the results of a study requested by Senator Elizabeth Warren and Rep. Elijah Cummings, involving the cost to taxpayers of the rollback of the Dodd-Frank Act in the “cromnibus” spending bill last December. As Jessica Desvarieux put it on the Real News Network, “the rule reversal allows banks to keep $10 trillion in swaps trades on their books, which taxpayers could be on the hook for if the banks need another bailout.”

The promise of Dodd-Frank, however, was that there would be “no more taxpayer bailouts.” Instead, insolvent systemically-risky banks were supposed to “bail in” (confiscate) the money of their creditors, including their depositors (the largest class of creditor of any bank). That could explain the push to go cashless. By quietly eliminating the possibility of cash withdrawals, the central bank can make sure the deposits are there to be grabbed when disaster strikes.

If central bankers are seriously trying to stimulate the economy with negative interest rates, they need to repeat the Wörgl experiment in full. They need to first get some new money into the economy, money that goes directly to the consumers and local businessmen who will spend it. This could be achieved in a number of ways: with a national dividend; or by using quantitative easing for infrastructure or low-interest loans to states; or by funding free tuition for higher education. Consumers will hit the malls when they have some new discretionary income to spend.

As you may have noticed our human economy does not work very well. In fact, it barely works at all. One of our major problems is that we humans mistake money for wealth. They are not the same.

This error results in a world that works for no one. The 1% would argue that the world does work just fine for them, but they would be wrong.

One of our best human thinkers writing in 1970, explained this error clearly. He felt this error represented such a great danger, that it might destroy the United States of America within the next 30 years.

Wealth Versus Money

Alan Watts

In the year of Our Lord Jesus Christ 2000, the United States of America will no longer exist. This is not an inspired prophecy based on supernatural authority but a reasonably certain guess. “The United States of America” can mean two quite different things. The first is a certain physical territory, largely on the North American continent, including all such geographical and biological features as lakes, mountains and rivers, skies and clouds, plants, animals, and people. The second is a sovereign political state, existing in competition with many other sovereign states jostling one another around the surface of this planet. The first sense is concrete and material; the second, abstract and conceptual.

If the United States continues for very much longer to exist in this second sense, it will cease to exist in the first. For the land and its life can now so easily be destroyed—by the sudden and catastrophic methods of nuclear or biological warfare, or by any combination of such creeping and insidious means as overpopulation, pollution of the atmosphere, contamination of the water and erosion of our natural resources by maniacal misapplications of technology. For good measure, add the possibilities of civil and racial war, self–strangulation of the great cities and breakdown of all major transportation and communication networks. And that will be the end of the United States of America, in both senses.

There is, perhaps, the slight possibility that we may continue our political and abstract existence in heaven, there to enjoy being “better dead than Red” and, with the full authority of the Lord God, to be able to say to our enemies squirming in hell, “We told you so!” On the grounds of such hopes and values, someone may well push the Big Red Button, to demonstrate that belief in spiritual immortality can be inconsistent with physical survival. Luckily for us, our Marxist enemies do not believe in any such hereafter.

When I make predictions from a realistic and hard–boiled point of view, I tend to the gloomy view of things. The candidates of my choice have never yet won in any election in which I have voted. I am thus inclined to feel that practical politics must assume that most people are either contentious and malevolent or stupid, that their decisions will usually be shortsighted and self–destructive and that, in all probability, the human race will fail as a biological experiment and take the easy downhill road to death, like the Gadarene swine. If I were betting on it— and had somewhere to place my bet—that’s where I would put my money.

But there is nowhere to lay a bet on the fate of mankind. Likewise, there is no way of standing outside the situation and looking at it as an impartial, coldly calculating, objective observer. I’m involved in the situation and therefore concerned; and because I am concerned, I’ll be damned if I’ll let things come out as they would if I were just betting on them.

There is, however, another possibility for the year ad 2000. This will require putting our minds on physical facts and being relatively unconcerned with the United States of America as an abstract political entity. By overlooking the nation, we can turn full attention to the territory, to the actual earth, with its waters and forests, flowers and crops, animals and human beings—and so create, with less cost and suffering than we are bearing in 1968, a viable and thoroughly enjoyable biological experiment.

The chances may be slim. Not long ago Congress voted, with much patriotic rhetoric, for the imposition of severe penalties upon anyone presuming to burn the flag of the United States. Yet the very Congressmen who passed this law are responsible, by acts of commission or omission, for burning, polluting, and plundering the territory that the flag is supposed to represent. Therein, they exemplified the peculiar and perhaps fatal fallacy of civilization: the confusion of symbol with reality.

Civilization, comprising all the achievements of art and science, technology and industry, is the result of man’s invention and manipulation of symbols—of words, letters, numbers, formulas and concepts, and of such social institutions as universally accepted clocks and rulers, scales and timetables, schedules and laws. By these means, we measure, predict, and control the behavior of the human and natural worlds—and with such startling apparent success that the trick goes to our heads. All too easily, we confuse the world as we symbolize it with the world as it is. As semanticist Alfred Korzybski used to say, it is an urgent necessity to distinguish between the map and the territory and, he might have added, between the flag and the country. Let me illustrate this point and, at the same time, explain the major obstacle to sane technological progress, by dwelling on the fundamental confusion between money and wealth. Remember the Great Depression of the Thirties? One day there was a flourishing consumer economy, with everyone on the up–and–up; and the next, unemployment, poverty, and bread lines. What happened? The physical resources of the country—the brain, brawn, and raw materials—were in no way depleted, but there was a sudden absence of money, a so–called financial slump. Complex reasons for this kind of disaster can be elaborated at length by experts on banking and high finance who cannot see the forest for the trees. But it was just as if someone had come to work on building a house and, on the morning of the Depression, the boss had said, “Sorry, baby, but we can’t build today. No inches.” “Whaddya mean, no inches? We got wood. We got metal. We even got tape measures.” “Yeah, but you don’t understand business. We been using too many inches and there’s just no more to go around.”

A few years later, people were saying that Germany couldn’t possibly equip a vast army and wage a war, because it didn’t have enough gold.

What wasn’t understood then, and still isn’t really understood today, is that the reality of money is of the same type as the reality of centimeters, grams, hours, or lines of longitude. Money is a way of measuring wealth but is not wealth in itself. A chest of gold coins or a fat wallet of bills is of no use whatsoever to a wrecked sailor alone on a raft. He needs real wealth, in the form of a fishing rod, a compass, an outboard motor with gas, and a female companion.

But this ingrained and archaic confusion of money with wealth is now the main reason we are not going ahead full tilt with the development of our technological genius for the production of more than adequate food, clothing, housing, and utilities for every person on earth. It can be done, for electronics, computers, automation techniques, and other mechanical methods of mass production have, potentially, lifted us into an age of abundance in which the political and economic ideologies of the past, whether left, middle, or right, are simply obsolete. There is no question anymore of the old socialist or communist schemes of robbing the rich to pay the poor, or of financing a proper distribution of wealth by the ritualistic and tiresome mumbo jumbo of taxation. If, if we get our heads straight about money, I predict that by ad 2000, or sooner, no one will pay taxes, no one will carry cash, utilities will be free, and everyone will carry a general credit card. This card will be valid up to each individual’s share in a guaranteed basic income or national dividend, issued free, beyond which he may still earn anything more that he desires by an art or craft, profession or trade that has not been displaced by automation. (For detailed information on the mechanics of such an economy, the reader should refer to Robert Theobald’s Challenge of Abundance and Free Men and Free Markets, and also to a series of essays that he has edited, The Guaranteed Income. Theobald is an avant–garde economist on the faculty of Columbia University.)

Naturally, such outrageous proposals will raise the old cries, “But where’s the money going to come from?” or “Who pays the bills?” But the point is that money doesn’t and never did come from anywhere, as if it were something like lumber or iron or hydroelectric power. Again: money is a measure of wealth, and we invent money as we invent the Fahrenheit scale of temperature or the avoirdupois measure of weight. When you discover and mine a load of iron ore, you don’t have to borrow or ask someone for “a thousand tons” before you can do anything with it.

By contrast with money, true wealth is the sum of energy, technical intelligence, and raw materials. Gold itself is wealth only when used for such practical purposes as filling teeth. As soon as it is used for money, kept locked in vaults or fortresses, it becomes useless for anything else and thus goes out of circulation as a form of raw material; i.e., real wealth. If money must be gold or silver or nickel, the expansion and distribution of vast wealth in the form of wheat, poultry, cotton, vegetables, butter, wine, fish, or coffee must wait upon the discovery of new gold mines before it can proceed. This obviously ludicrous predicament has, heretofore, been circumvented by increasing the national debt—a roundabout piece of semantic obscurantism—by which a nation issues itself credit or purchasing power based, not on holdings in precious metals, but on real wealth in the form of products and materials and mechanical energy. Because national debts far exceed anyone’s reserves of gold or silver, it is generally supposed that a country with a large national debt is spending beyond its income and is well on the road to poverty and ruin—no matter how enormous its supplies of energy and material resources. This is the basic confusion between symbol and reality, here involving the bad magic of the word “debt,” which is understood as in the phrase “going into debt.” But national debt should properly be called national credit. By issuing national (or general) credit, a given population gives itself purchasing power, a method of distribution for its actual goods and services, which are far more valuable than any amount of precious metal.

Mind you, I write of these things as a simple philosopher and not as a financial or economic expert bristling with facts and figures. But the role of the philosopher is to look at such matters from the standpoint of the child in Hans Andersen’s tale of The Emperor’s New Clothes. The philosopher tries to get down to the most basic, simple principles. He sees people wasting material wealth, or just letting it rot, or hoarding it uselessly for lack of purely abstract counters called dollars or pounds or francs.

From this very basic or, if you will, childish point of view, I see that we have created a marvelous technology for the supply of goods and services with a minimum of human drudgery. Isn’t it obvious that the whole purpose of machines is to get rid of work? When you get rid of the work required for producing basic necessities, you have leisure—time for fun or for new and creative explorations and adventures. But with the characteristic blindness of those who cannot distinguish symbol from reality, we allow our machinery to put people out of work—not in the sense of being at leisure but in the sense of having no money and of having shamefacedly to accept the miserable charity of public welfare. Thus—as the rationalization or automation of industry extends—we increasingly abolish human slavery; but in penalizing the displaced slaves, in depriving them of purchasing power, the manufacturers in turn deprive themselves of outlets and markets for their products. The machines produce more and more, humans produce less and less, but the products pile up undistributed and unconsumed, because too few can earn enough money and because even the hungriest, greediest, and most ruthless capitalist cannot consume ten pounds of butter per day.

Any child should understand that money is a convenience for eliminating barter, so that you don’t have to go to market with baskets of eggs or firkins of beer to swap them for meat and vegetables. But if all you had to barter with was your physical or mental energy in work that is now done by machines, the problem would then be: What will you do for a living and how will the manufacturer find customers for his tons of butter and sausages?

The sole rational solution would be for the community as a whole to issue itself credit—money—for the work done by the machines. This would enable their products to be fairly distributed and their owners and managers to be fairly paid, so that they could invest in bigger and better machines. And all the while, the increasing wealth would be coming from the energy of the machines and not from ritualistic manipulations with gold. In some ways, we are doing this already, but by the self-destructive expedient of issuing ourselves credit (now called debt) for engines of war. What the nations of the world have spent on war since 1914 could, with our technology, have supplied every person on earth with a comfortable independent income. But because we confuse wealth with money, we confuse issuing ourselves credit with going into debt. No one goes into debt except in emergency; and therefore, prosperity depends on maintaining the perpetual emergency of war. We are reduced, then, to the suicidal expedient of inventing wars when, instead, we could simply have invented money—provided that the amount invented was always proportionate to the real wealth being produced. We should replace the gold standard by the wealth standard. The difficulty is that, with our present superstitions about money, the issue of a guaranteed basic income of, say, $10,000 per annum per person would result in wild inflation. Prices would go sky–high to “catch” the vast amounts of new money in circulation and, in short order, everyone would be a pauper on $10,000 a year. The hapless, dollar–hypnotized sellers do not realize that whenever they raise prices, the money so gained has less and less purchasing power, which is the reason that as material wealth grows and grows, the value of the monetary unit (dollar or pound) goes down and down—so that you have to run faster and faster to stay where you are, instead of letting the machines run for you. If we shift from the gold standard to the wealth standard, prices must stay more or less where they are at the time of the shift and—miraculously—everyone will discover that he has enough or more than enough to wear, eat, drink, and otherwise survive with affluence and merriment.

It is not going to be at all easy to explain this to the world at large, because mankind has existed for perhaps one million years with relative material scarcity, and it is now roughly a mere one hundred years since the beginning of the industrial revolution. As it was once very difficult to persuade people that the earth is round and that it is in orbit around the sun, or to make it clear that the universe exists in a curved space–time continuum, it may be just as hard to get it through to “common sense” that the virtues of making and saving money are obsolete. It may have to be put across by the most skillfully prepared and simply presented TV programs, given by scientific–looking gentlemen in spectacles and white coats, and through millions of specially designed comic books.

It will always be possible, of course, for anyone so inclined to earn more than the guaranteed basic income; but as it becomes clearer and clearer that money is not wealth, people will realize that there are limits to the real wealth that any individual can consume. We may have to adopt some form of German economist Silvio Gessell’s suggestion that money not in circulation be made progressively perishable, declining in value from the date of issue. But the temptation to hoard either money or wealth will dwindle as it becomes obvious that technology will keep the supplies coming and that you cannot drive four cars at once, live simultaneously in six homes, take three tours at the same time, or devour twelve roasts of beef at one meal.

All this will involve a curious reversal of the Protestant ethic, which, at least in the United States, is one of the big obstacles to a future of wealth and leisure for all. The Devil, it is said, finds work for idle hands to do, and human energy cannot be trusted unless most of it is absorbed in hard, productive work—so that, on coming home, we are too tired to get into mischief. It is feared that affluence plus leisure will, as in times past, lead to routs and orgies and all the perversities that flow therefrom, and then on to satiation, debilitation, and decay— as in Hogarth’s depiction of A Rake’s Progress.

Indeed, there are reasonable grounds for such fears, and it may well be that our New England consciences, our chronic self–disapproval, will have to be maintained by an altogether new kind of sermonizing designed to inculcate a fully up–to–date sense of guilt. Preachers of the late twentieth century will have to insist that enjoyment of total luxury is a sacred and solemn duty. Penitents will be required to confess such sins as failing to give adequate satisfaction to one’s third concubine or lack of attention to some fine detail in serving a banquet to friends—such as forgetting to put enough marijuana in the turkey stuffing. Sure, I am talking with about one half of my tongue in my cheek, but I am trying to make the deadly serious point that, as of today, an economic utopia is not wishful thinking but, in some substantial degree, the necessary alternative to self–destruction.

The moral challenge and the grim problem we face is that the life of affluence and pleasure requires exact discipline and high imagination. Somewhat as metals deteriorate from “fatigue,” every constant stimulation of consciousness, however pleasant, tends to become boring and thus to be ignored. When physical comfort is permanent, it ceases to be noticed. If you have worried for years about lack of money and then become rich, the new sense of ease and security is short–lived, for you soon begin to worry as much as ever—about cancer or heart disease. Nature abhors a vacuum. For this reason, the life of pleasure cannot be maintained without a certain asceticism, as in the time and effort required for a woman to keep her hair and face in fine condition, for the weaving of exquisite textiles or for the preparation of superior food. Thus, the French distinguish between a gourmand and a gourmet, the former being a mere glutton, a trencherman who throws anything and everything down the hatch; and the latter, a fussy, subtle, and sophisticated devotee of the culinary arts.

Timothy Leary was not so wide of the mark when he said that we must go out of our minds (abstract values) to come to our senses (concrete values). For coming to our senses must, above all, be the experience of our own existence as living organisms rather than “personalities,” like characters in a play or a novel acting out some artificial plot in which the persons are simply masks for a conflict of abstract ideas or principles. Man as an organism is to the world outside like a whirlpool is to a river: man and world are a single natural process, but we are behaving as if we were invaders and plunderers in a foreign territory. For when the individual is defined and felt as the separate personality or ego, he remains unaware that his actual body is a dancing pattern of energy that simply does not happen by itself. It happens only in concert with myriads of other patterns—called animals, plants, insects, bacteria, minerals, liquids, and gases. The definition of a person and the normal feeling of “I” do not effectively include these relationships. You say, “I came into this world.” You didn’t; you came out of it, as a branch from a tree.

So long as we do not effectively feel this to be so, there is no motivation for forms of politics that recognize the interdependence of all peoples, nor for forms of technology that realize man’s inseparability from the entire network of natural patterns. How, then, is the sense of self to be changed? By scientific education? It convinces the intellect but not the emotions. By religion? The record is not hopeful. By psychotherapy? Much too slow. If anything is to be done about it, and done in time, I must agree with Aldous Huxley (and with the sober and scholarly Arthur Koestler in his Ghost in the Machine) that our only resort may be psychopharmacology—a chemical, a pill, that brings the mind to its senses.

Although I have experimented very sympathetically with such methods (LSD, etc.), I would be as reluctant to try to change the world with psychedelics as to dose everyone indiscriminately with antibiotics. We do not yet know what ecological damage the latter may have done, how profoundly they may have upset certain balances of nature. I have, therefore, another and perhaps equally unacceptable suggestion.

This is simply that nothing be done about it. Shortly before his death, Robert Oppenheimer is said to have remarked that the whole world is, quite obviously, going to hell—adding, however, that the one slim chance of its not going to hell is that we do absolutely nothing to stop it. For the greatest illusion of the abstract ego is that it can do anything to bring about radical improvement either in itself or in the world. This is as impossible, physically, as trying to lift yourself off the floor by your own bootstraps. Furthermore, the ego is (like money) a concept, a symbol, even a delusion—not a biological process or physical reality. Practically, this means that we stop crusading—that is, acting for such abstract causes as the good, righteousness, peace, universal love, freedom, and social justice, and stop fighting against such equally abstract bogeys as communism, fascism, racism, and the imaginary powers of darkness and evil. For most of the hell now being raised in the world is well intentioned. We justify our wars and revolutions as unfortunate means for good ends, as a general recently explained that he had destroyed a village in Vietnam for its own safety. This is also why we can reach no genuine agreement—only the most transitory and unsatisfactory compromises—at the conference tables, for each side believes itself to be acting for the best motives and for the ultimate benefit of the world. To be human, one must recognize and accept a certain element of irreducible rascality both in oneself and in one’s enemies. It is, therefore, an enormous relief to realize that these abstract ambitions are total nonsense and to see that we have been wasting untold psychic and physical energy in a fatuous enterprise. For when it is understood that trying to have good without evil is as absurd as trying to have white without black, all that energy is released for things that can be done. It can be diverted from abstract causes to specific, material undertakings—to farming and cooking, mining and engineering, making clothes and buildings, traveling and learning, art, music, dancing, and making love. Surely, these are excellent things to do for their own sake and not, please not, for one’s own or anyone else’s improvement.

This article was forwarded to me this morning by good and wise friend. I realized it was an important read. … Re-posted from the August 13, 2014 edition ofTHE INDEPENDENT.

Why does ISIS hate the West so much?

James Bloodworth

When it comes to the totalitarian rebellions against liberal societies throughout history, sophisticated people have very often failed to grasp what goes on in the minds of the fanatic.

Back in the 1930s, attempts to explain fascism famously tripped up many leading intellectuals of the time. Hitler’s demands to expand the Third Reich were taken by many otherwise sophisticated people as code for something else. Was it not true, after all, that the Treaty of Versailles had imposed punitive and unreasonable conditions on Germany? As Paul Berman noted in his book, Terror and Liberalism, despite the SS repeatedly reaffirming at its death camps that “here there is no why”, for much of the left there was always a “why”.

As he writes: “The anti-war socialists gazed across the Rhine and simply refused to believe that millions of upstanding Germans had enlisted in a political movement whose animating principles were paranoid conspiracy theories, blood-curdling hatreds, medieval superstitions and the lure of murder.”

It wasn’t just the French left that tied itself in mental knots over the rapid growth of militarist fascism. In an edition of the British pacifist newspaper Peace News, the Marquess of Tavistock, who sat on the national council for the Peace Pledge Union, blamed German aggression not on the lunacy of National Socialism, but instead on the “very serious provocation which many Jews have given by their avarice and arrogance when exploiting Germany’s financial difficulties, by their associations with commercialised vice, and by their monopolisation of certain professions”. In a letter written in 1942, the pacifist poet D. S. Savage also famously informed George Orwell that Hitler required “not condemnation, but understanding”.

More recently, a good portion of many column inches dedicated to “explaining” the 2001 attacks on New York similarly relied upon a straightforward inability to countenance the existence of al-Qaeda. Thoughtful people instinctively hunted for the so-called “root cause” of jihadist violence in the material world, largely ignoring the seriousness of the ideas held by the perpetrators.

The real spark of fascistic violence must always and everywhere be poverty and hardship, or so it was assumed; hence the multiple attempts to conflate the repression of the Palestinians with 9/11 – despite the fact that al-Qaeda was and remains ideologically opposed to the creation of a Palestinian state.

In reality the sheer irrationality of violent Islamism should have been obvious when in the years following 9/11 young fanatics started (sometimes successfully) trying to blow up nightclubs. The British-born Islamists who plotted in 2004 to murder clubbers in the Ministry of Sound nightclub in London did not after all cite Palestine or imperialism as their Casus belli, but instead gleefully talked about murdering “those slags, dancing around”.

In other words, it was our liberalism that the would-be bombers despised, rather than our inability to be sufficiently liberal.

Indeed, as with almost all fanatical religious movements, an obsession with the way women behave goes right to the heart of Islamism. Sayyid Qutb, the author of the Mein Kampf of Islamism, Milestones, embraced a fundamentalist interpretation of Islam on the back of a visit to the United States, where he found himself appalled at the freedom afforded to American women.

Yet all too often, rather than acknowledge the existence of pathological movements that reject the very premise of a free society, the default assumption among liberals has run something like this: fascist violence must be code for something else, probably despair. The fanatic is only fanatical because ‘we’ have driven him to it. If only Britain and America behaved properly, people would not hate us.

And of course, the West has certainly behaved in ways that have helped to swell the ranks of movements like Isis, just as they were atrocities committed by American armies during the previous century that provided ammunition for the communist cause. But let us be clear: the “root cause” of fascism (and what Isis is practicing us clerical fascism) is an absolute rejection of a plural and democratic society. It is our existence, rather than the subtleties of how we behave, that is intolerable to Isis, hence current attempts to exterminate “un-Islamic” religious minorities in Iraq – a genocide-in the making thankfully being thwarted by the United States.

Despite his many flaws, even the the consummate Marxist Leon Trotsky recognised the psychopathic element that underpins fascism, writing of the growth of Nazism in the 1930s that “Today, not only in the peasant homes, but also in the sky-scrapers, there lives alongside the twentieth century the tenth or thirteenth. A hundred million people use electricity and still believe in the magic power of signs and exorcism.”

In Iraq and Syria today, alongside the twenty-first century exists the seventh. To look for the “root cause” of Isis is to miss the point. The group represents all the subterranean barbarism that every so often is apt to crawl, blinking into the light, out from the depths of the human subconscious.

Intelligent people enjoy saying that “nothing exists in a vacuum”. In reality things very often do. Some outcomes are no more than the result of people having certain thoughts and as a consequence performing certain actions. Isis would see us all drop dead in an instant. And like their European predecessors, there really is no “why”.

James Bloodworth is a political journalist and editor ofLeft Foot Forward.He has previously written for the Observer, the Independent on Sunday, the Irish Independent, the Huffington Post, Red Pepper and Jacobin.